High Spirits: The Cannabis Business Podcast
Hosts Ben Larson and AnnaRae Grabstein serve up unfiltered insights, reveal their insiders' perspectives, and illuminate transformative ideas about the cannabis industry for people who want to make sense of it all.
High Spirits: The Cannabis Business Podcast
#059 - Demystifying Metrc and the Multi-Sided Platform Business
๐ฟ๐๏ธ Join Ben & AnnaRae this week as we explore the intricate world of cannabis compliance with Michael Johnson, CEO of Metrc. Now synonymous with seed-to-sale tracking, Metrc stands at the forefront of regulatory compliance in the cannabis industry. In this episode, we'll uncover the human element behind the platform, the challenges of balancing diverse stakeholder needs, and the future of cannabis compliance.
๐ ๐๐ฏ๐ผ๐๐ ๐ง๐ต๐ถ๐ ๐๐ฝ๐ถ๐๐ผ๐ฑ๐ฒ: To operators in the cannabis industry, Metrc is the backbone of daily operations and compliance. We'll peel back the layers of this often mistakenly maligned "necessary evil" to understand not just how it works, but who makes it work and why it is the way it is. Michael will share insights into the multi-sided nature of Metrc's business model, its interactions with state regulators, third-party software providers, and the licensed operators who rely on it every day.
๐ก ๐ช๐ต๐ฎ๐ ๐ฌ๐ผ๐'๐น๐น ๐๐ฒ๐ฎ๐ฟ๐ป:
๐ ๐๐ฏ๐ด๐ช๐ฅ๐ฆ ๐๐ฆ๐ต๐ณ๐ค: Get a closer look at the team and technologies driving this crucial compliance system.
โ๏ธ ๐๐ข๐ญ๐ข๐ฏ๐ค๐ช๐ฏ๐จ ๐๐ค๐ต: Discover how Metrc manages the complex demands of regulators, tech partners, and cannabis businesses.
๐ฑ ๐๐ฏ๐ฅ๐ถ๐ด๐ต๐ณ๐บ ๐๐ท๐ฐ๐ญ๐ถ๐ต๐ช๐ฐ๐ฏ: Review how compliance has transformed with the cannabis industry over time and where itโs heading.
๐ฎ ๐๐ถ๐ต๐ถ๐ณ๐ฆ ๐๐ณ๐ฆ๐ฅ๐ช๐ค๐ต๐ช๐ฐ๐ฏ๐ด: Speculate on future trends in cannabis compliance and technology with insights from the helm of the industryโs leading tracker.
๐ ๐ ๐ฒ๐ฒ๐ ๐ ๐ถ๐ฐ๐ต๐ฎ๐ฒ๐น ๐๐ผ๐ต๐ป๐๐ผ๐ป: Appointed as CEO in 2022, Michael Johnson has rapidly steered Metrc toward innovative horizons. With a rich background as CFO at various technology and health firms, Michael brings a unique perspective to the cannabis compliance sector. His approach is not just about monitoring and regulation but fostering an ecosystem that supports safe, sustainable growth in the industry.
๐
๐ช๐ต๐ ๐ง๐๐ป๐ฒ ๐๐ป? This episode is crucial for anyone involved in the cannabis industry, from regulators to entrepreneurs, and even tech enthusiasts curious about the intersection of technology and regulatory compliance. Whether you're grappling with Metrcโs systems or just keen to understand more about the regulatory landscape, this conversation promises to enlighten, inform, and inspire.
Tune in to High Spirits this Thursday on LinkedIn Live for an episode filled with deep insights, behind-the-scenes stories, and expert perspective on cannabis compliance.
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Hey everybody, welcome to Episode 59 of High Spirits Demystifying Metric and the Multisided Platform Business. I'm Ben Larson and, as always, I'm joined today by Anna Rae Grabstein. It's Thursday, september 12, 2024. And today we're going to cover a lot. We're going to unpack behind the scenes of metric. That's exciting. Before we get there, maybe we can unpack what the hell's going on in our home state of California. What do you think, anna Rae? Oh my gosh.
AnnaRae Grabstein:I've been getting so many phone calls and I know that you have too. Yeah, last week there was a big announcement from the governor about a crackdown on hemp and at the same time there's a big announcement from the governor about a crackdown on hemp and at the same time there's a whole bunch of other new legislation moving through that could really shift the dynamics of the regulated adult use supply chain. There is legislation that seems likely to pass that will allow small farms to sell direct to consumers, which would be like a massive change, more of like a farmer's market kind of model. Uh, there's just a lot going on in california. Uh, uncertainty per the usual yeah how are you handling it?
Ben Larson:uh, with a smile and lack of sleep. I you know, phone was ringing off the hook starting on friday finally had the wherewithalal Monday night to sit down and just put all my thoughts down on paper so I could just send people a link instead of re-explaining it every time, which I think has helped you know.
AnnaRae Grabstein:I appreciated what you wrote. Everyone should go read it if they're wondering what Ben thinks. It's very clear.
Ben Larson:My newsletter Infused Insights. Subscribe like do all the things as always. It um. If they're wondering what ben thinks, it's very my newsletter infused insights. Subscribe like do all the things as always. Um, no, but it's just. Yeah, it's just a mess like there.
Ben Larson:You know, there was legislation that was on the books I think we had talked about on a previous show ab2223 failed to pass, um, but you know the the governor, uh, was hell-bent on making sure something got through and I would say that the emergency ruling, which is not official yet it still has to go through a process with the office of administrative law, um, but it's highly likely to go through within the next month and I don't think it's as bad as 22, which is a very complex bill that largely redefined hemp and on down the line and definitely tried to restrict THC being in said hemp.
Ben Larson:The new ruling kind of really focuses on the final product. So it's just saying it's like you can't have, you can't sell, manufacture these products in California. The problem is is that it says you can't have any detectable THC. So we're now back in this realm in California where we're talking about selling CBD isolate and not only CBD isolate but also limiting it to five undefined servings and then having to age gate it, and so it's. It's like it's a massive hit to the cbd and hemp market, and I guess what we always say is, like that is what happens when the pendulum starts swinging, is that we have a lot of unintended consequences, and so who knows if it goes through. We'll, we'll see, um, but certainly for for the hemp category, there's a lot of work to be done.
AnnaRae Grabstein:Well, I think what California said, and what the governor said in a very clear way, is that they are dedicated to consumer safety and to protecting children.
AnnaRae Grabstein:So that message was heard loud and clear and I think that you know. Our guest today is a big part of the movement to ensure consumer safety in the regulated cannabis supply chain and all of the efforts that states have made to create compliance in their in their regulated spaces. It sometimes seems like it is undercut by the lack of that level of transparency in the hemp supply chain, and so it becomes this complex moment between entrepreneurs that are seemingly trying to create and innovate and build in a space that is open and like a clash or a conflict. And I think that what's missing from the conversation that has happened in California over the past five days is that the people that make these hemp products are not necessarily opposed to consumer safety, regulation or safety. It's just there isn't an existing framework right now for them to participate in, and my hope is that there is regulation, and because we know that prohibition does not lead to the best outcomes and regulation seems to be a better path forward for everyone. So we'll see what happens.
Ben Larson:Yeah, yeah. I want to say one more thing before we bring on our guests, because I've had a lot of conversations over the last week and what hasn't really been said out there is that all this is going to do is punish the good players the Total Wines, the Bevmos is going to do is punish the good players, yeah, um, the total wines, the bevmos, the, the brands that are selling through those, those retailers, those are the ones that are a going to be enforced because they're, they're licensed by abc and and whatnot, and they like to follow rules, and so they thought the rules were clear. Now the rules are changing, so they'll follow them, but the ones that won't are the ones that are selling all the deleterious products and are not being enforced, and that's been going on for years. And so you know, just to your point, this is another version of prohibition and further defining how prohibition doesn't work.
AnnaRae Grabstein:Yeah, totally, it's pretty wild. They're defining how prohibition doesn't work. Yeah, totally, it's pretty wild. Yeah, so we could talk about this all day. We will make time in the future, as things progress, to talk about this some more, but if you listen to this podcast, you know that Ben and I think about this stuff all the time. We're talking to people and we understand the pains that people are feeling and the constant changes that are going on and just think that there's opportunities buried in all of it and we can improve. So we'll keep doing that and stay resolute to keep fixing these problems.
AnnaRae Grabstein:And I mean I will say other than that, I will say one more thing in terms of a check-in for me is that a couple months ago we had on Lauren Carpenter and I was talking about a book that I'd been reading with a client the Five Dysfunctions of a Team and that I was thinking about starting a book club, and so I've been thinking about ever since then what would be the best book to start my book club with, and I started a brand new book that just came out. It's called the Journey of Leadership how CEOs Learn to Lead from the Inside Out, and I'm halfway through it. It just came out this week and I think that I have my first book for my book club, so stay tuned y'all.
AnnaRae Grabstein:This one is a killer and we're gonna have some cool discussions in the future and I'll be letting people know.
Ben Larson:Love it.
AnnaRae Grabstein:Yeah, good. Well, so should we kick this off?
Ben Larson:Let's do it. Let's do it Awesome.
AnnaRae Grabstein:So today, our guest is Michael Johnson. He's the CEO of metric, and metric is the leading track and trace technology company in the cannabis industry. Metricric ensures detail compliance and has been helping operators and regulators maintain a transparent supply chain since the beginning of the regulated supply chain, and Michael took the CEO role in 2022 and has been guiding the company through a really transformative time in the industry. Prior to being the CEO of Metric, he was the CFO of Metric and also the CFO of a number of other companies in the tech and health spaces, and one of my favorite things about his bio is that he also is a certified Lean Six Sigma Black Belt, which means that he likes process and clarity and doing things efficiently, which I do as well. So welcome Michael, super stoked to have you here today.
Michael Johnson:Likewise. Thank you for welcoming me. I would love to be the first signee. Sign up for your book club. I'm a huge fan of the five dysfunction of the team and everything Patrick Lanzioni has written. So sign me up, I'm the owner of the parts.
AnnaRae Grabstein:I will let you know. Is there a?
Ben Larson:Patrick Lanzioni fan club, because he absolutely should have one.
Michael Johnson:It's every company that I've been a part of, probably after got out of public accounting. We've done something with Patrick Lanzioni and his consulting group, the Table Group. I can't say enough about it. Every time you open a Lencioni book a lot of times written in the form of a fable, if everybody doesn't know it's like a story. It's a little less dense than a textbook, which you might see in a lot of other books related to business and organizational effectiveness. It's definitely something you can relate to. It always feels like common sense and it never feels like common practice.
AnnaRae Grabstein:Then you keep coming back to it forever, which is awesome. That's when you know a lesson is real and it becomes cemented in your brain as something that you can just automatically reference like muscle. Yeah, absolutely, Michael you have been leading metric during a pivotal time for cannabis industry evolution and for compliance and I am wondering if we could just dive in and if you could talk to us about how metric serves as a bridge between the world of operators and regulators.
Michael Johnson:Absolutely. It's all about data, and so how the data gets input into metric, the different stages along the supply chain from everything, literally from seed to sale, although, as I think everybody knows, most cannabis is being grown from seed right now.
Ben Larson:So but it doesn't sound good to say from clipping to sale.
Michael Johnson:So we're going to stick with seed to sale? Yeah, and there's. I mean there's over 350 discrete different events that can occur in that supply chain and there's, frankly, an infinite number of handoffs along the way in the supply chain for cannabis and, just like any other supply chain, it can get complicated. You have folks that are growing that are kind of taking their plants, harvesting their plants and then breaking apart their harvest to send to many different people. And then you've got some folks that are going to take that in and combine it with other harvests and other packages and then they're going to turn into distillate and drinks and everything else along the way and you get a lot of separation, a lot of combination, separation, lot of separation, a lot of combination, separation, redistribution.
Michael Johnson:It's really not a supply chain. We talk a lot about it as a supply chain because supply chain as a term is really one that's generally accepted, but when you look at cannabis and you look at the life cycle of a plant and what happens all the way across the supply chain to that end sale, it's really a genealogy and you're breaking down this sort of relationship and truly ancestral type relationships that are going to occur between a plant and even a specific strain or specific genetics of a plant or of a strain, and how that and how each and how each production cycle or each um production batch is going to produce, um, uh, something slightly different, and what that means and how that changes. Even parts of um, of distillate or concentrate that you feel like you've broken down to something that's more scientifically, uh, homogenous, and it it's. It's a beautiful thing, it's super exciting. I'm an incredible nerd for the genealogy of this supply flow and I really can't be more excited about being able to be this common thread throughout that entire flow, to be able to standardize and provide visibility to both operators and also the industry.
Michael Johnson:Writ large, the biggest part about cannabis is fighting the two biggest challenges, which are the illicit market and then, secondarily, stigma and non-consumption, like those are. That's the same. So it is. I know I said three things, but stigma and non-consumption. If you have a transparent supply chain, if you're following the good actors like you mentioned earlier, ben, about different than what we're talking about specifically with cannabis, they have a lot more confidence in what they're consuming. They have a lot more confidence in the supply chain where something came from, how it's going to affect them. The confidence has been properly handled across the supply chain, it's been properly tested and the outcome, or the effect, that they're going to be much more comfortable sharing with their peers and opening up the opportunities and really a lot of the benefits associated with cannabis for the entire community and really the whole country.
Ben Larson:Michael, one of the reasons I was really excited to have you on the show was that Metric has kind of been genericized with regulations and just the system that we all have to operate within. You know, and sometimes it gets associated as almost the government itself. But you're a company, you have employees, and so I want to kind of dig in and just kind of open up, pull back the curtain a little bit on you guys as a company and talk about your customer base. And I mentioned in the intro you know this like double-sided kind of platform or multi-sided platform and MSP, which is more on the technical terms. Can we just dive into that aspect a little bit, like who is your customer? You know, how do you kind of approach the development of the software when you're serving both the government operators and, frankly, other softwares?
Michael Johnson:It's a great question and I appreciate you asking it because it's one that I am I'm really proud of how we've evolved so Metrix's story is really a bit of a past present future tale, a ghost of Christmas past, so to speak.
Michael Johnson:13 years ago in Colorado, no one had built anything in terms of the level of regulatory infrastructure for cannabis in the legal market ever at that point, and so certainly the regulators were figuring it out I think everybody in the industry was figuring it out, and metric was certainly figuring it out, and so there was very specific I think guardrails would be the best description of what metric needed to be and that I do think became somewhat synonymous with the regulatory side or with the GovTech side and, I'm sorry, with the government side that you as an operator are going to have, working within the regulated framework is the system that the regulations are requiring you to use. And so and I understand kind of how metric evolved and I understand exactly what the mandate was from the state customers at that time as a result of building something specific for the regulator and specific for what would be required from the regulatory infrastructure, I think that we found ourselves in a position to where metric could have opened the aperture a bit and evaluated in a more intentional way how the industry writ large was accessing and using the system. And so as metric evolved, I think it got a little bit more cumbersome and grew pretty rapidly. As the cannabis industry in different states grew pretty rapidly, got a little bit more cumbersome. We're dealing with literally thousands of differentiators and regulations and statutes in every single state, so there's not a lot of comparability. And some things are a lot more basic, like what, what is? How tall is a plant at maturity? How tall would you describe a mature plant? And you'd be surprised at how widely variable that is state over state.
Michael Johnson:And so when I joined metric, it became apparent that we were at a crossroads and really exactly what you just mentioned, ben serving kind of two sides of that coin. And you had, I think, challenges with operators that are trying to grow their business in a place or an industry that had not been well defined, doesn't have years and years of history, didn't have people that went to school specifically for this, or at least not that many. There certainly are now and really we're just looking for anything to hang on to, and I think Metric did a good job at that core side of creating a standard, but it didn't create a delightful user experience for those operators. And so in the present and in the time that I've been a part of Metric, we've made a number of transitions in terms of how we are defining the customer, and I think it's a bit shocking when I share with folks Metric is a customer experience business, because I don't think that that's widely accepted yet. But that's what we are and that's what we're going to be and that's how we're going to double down.
Michael Johnson:We redefine how we look at the customer to not just the regulator is still the regulator and in fact, the attention and the relationship I think is more robust than ever. So, actually dedicating more time, we're just also doing more. We're doing more with more in a world where everybody is doing more with less. It's it's a little bit, it's a little bit of a paradox that we're trying to do more with more and that more that we're trying to do is about the customer. And the customer is both of you. It's each of your listeners, it's every operator, every participant in the supply chain, whether you are an actual grower, a processor, dispensary, whether you're a software company that makes tools for the cannabis industry, whether you're a regulator, whether you're a law enforcement professional, whether you're somebody that just lives in the community and sees cannabis dispensaries opening and wants to understand better about what's happening.
Michael Johnson:Every single point of contact in the cannabis ecosystem is the customer metric and we believe that we have an opportunity to create a delightful experience, to not just be a painkiller, to not just validate where product is coming from, but there are meaningful opportunities and there's meaningful pockets and seams where we have the opportunity to surprise and delight.
Michael Johnson:And that takes us to the metric of the future. It's the past, present, future story and in the future side, it's really about doubling down on that. Talking a lot less about it'd be great if this button existed or this feature existed. A lot more about how do we make compliance something that's desired, not required. How do we make a regulated market a competitive advantage? How do we make working within metrics something that is meaningful in terms of simply for our actual business, that expands across profitability, expands the entire pie for the industry by creating a culture of really strongly produced, responsibly created products that are safe for consumers, that protect children and really protect anyone that's just trying to get familiar with the products. And that's the future. What are the outcomes that we want to help achieve? Metric is your partner. We want to continue to be your partner and grow your businesses with you.
AnnaRae Grabstein:Well. So I want to jump in because I know that you're joining us today from a hotel in New Jersey and you're at that hotel's what you were doing. I was pretty surprised, because a CEO going and meeting with customers and having that be a regular part of the business process I think shows a really big commitment to ongoing innovation and understanding, which is what you're talking about, and I'm curious of what the outcome is of that. So you're meeting with customers, you're trying to understand how people are using things. What are the innovations that are ahead, that are going to actually be that roadmap that comes from understanding what customers want, desire and that moment of sparkle and magic that you're talking about? What's next?
Michael Johnson:Well. So these events are, I think, one example, but they really are just a kind of a cog in the overall machine of that commitment to really truly understanding the customer experience. So Metric is about 200 people right now. We turned over about 100 of those people in my durations or in my time here, so about a little bit more than 100 are new. That's really massive when you think about it. I've been for two years and so a lot of folks when we, when we made the shift to say we are a customer experience business, there's a lot of folks that opted out, and and that's always difficult, you know, because there's a lot of employees that opted out, employees opted out and so and we brought in a ton of additional employees. Because if you grow up in a space and you said, hey, I've been here for a decade and this is what we do and this is what I believe in, and now everything's changing and really that's what happened for some people?
Ben Larson:Not to call those people out, but what exactly did they believe in? Because I get inspired by the idea of serving a customer right.
Michael Johnson:I think folks have a difficult time appreciating exactly the question you asked, ben. How do you, how do you do both? And so, like I was, I was told here this is it, I'm I. I work for the regulator. Listen, the regulator. Whatever the regulator says is is right, um, and saying like, okay, like we're not, we're not going away from that, certainly, certainly not. Um, that that's, that's not the message I hope anybody hears. We're going to do more, we're going to do more with more. I don't know if I fit in that.
Michael Johnson:And so we start asking people to do more. We ask people to take time out to participate in customer support calls. I take customer support calls. We ask people to really understand exactly the way people are using the system.
Ben Larson:No, no no, I'm over here.
Michael Johnson:This isn't going to be a great fit for everyone, and that's okay and I'm, I'm, I'm, frankly, I'm happy that they opted out. It's difficult. There's a lot of great people that help build metric and get metric to the spot, and I appreciate them. No-transcript, that was true, and even if it wasn't, it works because that was the common brain and bringing in people that actually had the experience, that care about building the best outcome, that buy into the fact that metric can be this really amazing and incredible, uh, kind of central rail, for which this system and this really really like infantile industry.
Michael Johnson:It's only 13 years old and you look at all the crazy changes that you just talked about in california and it it hasn't really been that long and we're still talking about this level of velocity in terms of changing the one constant, one standard across the way and kind of using that eponymous term of metric which there's metric experts that are in states that metric doesn't serve, because metric has become synonymous with track and tracing compliance it enables this standard to move across the way where you're actually able to bring in people into the industry that understand the industry and understand at least the core elements of how things work. Now, I would be the first one to tell you that I don't think that's been the smoothest process, but there's a phrase in the military slow is smooth and smooth is fast. I think we were going too fast in the time before I was here and we ended up going. We ended up making a rockier kind of an impression, and what we've been able to do over the last few years and bringing in folks that are from all parts of the industry, both and including regulators we brought in former regulators, all parts of the industry to figure out the best possible outcome has enabled us, I believe, to get into a position where we have a smoother plan. We're deploying new software, new code every two weeks to make sure that we're hearing exactly what people are talking about the event today.
Michael Johnson:I have nothing to sell you. I mean, if you want to buy something, I'll find something, but that's not the point we're having today. Um, we've done about 16 of these this year getting onsite saying this is who we are. We understand some of the challenges you've had. We understand you may have felt like we were a black box. We've dedicated tremendous uh effort and resources to creating a better experience from you and every way that you interact with metric from a brand new support system to a brand new training platform to a brand new AI sidecar inside of metric so you can ask a plain English questions on how you can use metric in an easier way. We're going to continue down this path because it's incredibly meaningful.
AnnaRae Grabstein:Well, so so you know, cannabis has become accessible because of laws that changed, and then regulators come in and they figure out regulations to implement the laws, and then metric comes in as a tool for the regulators to implement the regulations and so, in many ways, going up the ladder, your kind of core functionality and those contracts with the state are dependent on regulations and the regulations existing and those regulations being complex enough that the regulators need tools.
AnnaRae Grabstein:And there's a lot of pushback constantly from especially states that are struggling with their market, that that there's widespread over-regulation in cannabis. And I can tell you that there's times when I've been in a cultivation in California and people just find it completely ridiculous that they need to be weighing their garbage and tracking that. And so you know, I know that you didn't write those regulations and you don't make those rules, like you guys are there to create the structures for the regulators to be able to implement them, kind of at a minimum. And then there's all this other work that you're doing that you've been touching on. I'm curious, like, what your position is on this discussion and narrative about over-regulation. Do you think that we have too much regulation in cannabis? And then the follow-up is really like.
Michael Johnson:What's the solution? It's a great question and I am sure the answer in some scenario is yes, and I'm sure the answer in many other scenarios is no. I can't really opine one way or another on that. What I can do is I can ensure that we're building software that takes even whatever the most perceived onerous regulation is and makes it as seamless as possible to comply with Regulations.
Michael Johnson:Cannabis definitely gets a reputation for being a heavily regulated industry, but it's not the only one. Testing requirements for romaine lettuce are just as extreme probably the wrong word. They're just as frequent and in some cases, more common and more often than many other industries, and so if you're going to consume something, there generally is a regulation, whether it's governed by the FDA or at the state level or even self-regulated. The industry for levels of testing and track and trace. Track and trace isn't special to cannabis and I think a lot of people in cannabis feel like it might be and it's unique. And we don't track every bottle of beer that's what I hear a lot but we do track every single cow that's raised for beef in the United States and every single one of them has an RFID tag attached to its ear. We track every single cow that produces milk. Every single dairy cow has an RFID tag around its neck and every single bundle of oysters that's harvested from a bay, every single one of them in very small batches, is tracked and identified.
Michael Johnson:There's no shortage of examples. Track and trace is not something that emerged in response to legalization of examples. Track and trace is not something that emerged from from in in response to legalization of cannabis. Track and trace is a is a global best practice that's adapted um for the cannabis industry. We think in a way that um has tremendous opportunity for uh advantageous um flow in that overall supply ecosystem. Um and and we've we've, I think, done intermediate like we've done a decent job at times of being able to express that and other times we haven't. But it's not. There's no scenario where any of the three of us, or even a large group of us, are gonna eliminate any potential future onerous regulation in any industry. I can't solve that. We can't solve that. What I can solve is I can solve whatever the most manually intensive processes I can. I can transmit that into something that is not onerous for you as an operator. That I can do.
Ben Larson:One of the questions that you know business leaders like us in the cannabis industry often get asked is you know what is the next applicable vertical for us to apply what we've learned or the technology we've built in this space? And, as you're mentioning, there's a lot of different markets that undergo some sort of track and trace, and so I'm curious, also because there's one obvious one that we were talking about at the beginning of the show of, like hemp, hemp, and there's been a lot of calls for better uh tracking and regulations in hemp, and I'm curious is hemp the next obvious one for metric, if you are looking beyond cannabis, and are there any conversations that have already started?
Michael Johnson:um, as for what that might look like, so there's a number of states that hemp is already part of the cannabis kind of oversight. Nevada is a good example. So we do track hemp. It's a little different and I think it's a little bit, I think, as you get into the complexities, as you mentioned earlier, about hemp and how much THC, and is there THC, um, delta, eight, delta, nine, uh, is is some kind of an isolate, you know, turn into THC, uh, you know, at a certain temperature, um, what does that look like? How to, how do we help facilitate the visibility along the, along the supply chain?
Michael Johnson:And I think, honestly, it really comes back to the exact same elements that I that I've spoken to, uh, as it relates to cannabis. And, honestly, it really comes back to the exact same elements that I've spoken to as it relates to cannabis. And it's not special to cannabis, it's every industry and if you provide great visibility and you provide something that consumers can actually feel confident about in terms of a level of regulation, a level of oversight, it's a sort of canopy or this sort of umbrella of confidence that the industry needs in terms of making further inroads to de-stigmatization and also full appreciation of the legal market to encourage folks to participate in the legal market instead of the illicit market, and hemp is not any different than any other substance, and so I feel really confident that, as metric continues to evolve and as we continue to seek out opportunities for kind of smoothing that supply chain while at the same time strengthening it and adding confidence in the protection of public health, I feel really good about every market that we're able to participate in having an improved outcome.
Ben Larson:Yeah, and before we jumped on we were talking about how big you have gotten and so like 200 employees, half of those customer facing I don't know if people understand how big the metric team actually is. And when you're a team of that size, 200 serving, you know, a core offering, albeit amongst a very kind of fragmented market. Tell me a little bit about what it is, especially adding 100 new employees over the last two years. You know, from a management perspective, your kind of your vision on culture and growing this team and kind of what is now really kind of driving the growth of the employee base as you consider these other markets, as you consider these other markets.
Michael Johnson:Yeah, it's about mission. It's about getting people on the boat that want to be on the boat. We're very fortunate to have an exceptionally high number of our employee base that we've worked with, that different people on our team have worked with in the past Half our executive team I've worked with in at least one other spot and people buying into the true commitment that we're a customer experience business, even though that sounds completely misaligned for some folks. I get it, but you need to buy in and it is a customer experience business and you need to double and triple and quadruple down on that. Jeff Bezos, who says the chief repeater I am the chief repeater. Customer experience is the number one thing that we care about and I think that when we recruit and attract people, that their cup is filled up. By taking care of others, by producing outcomes for our customers, they become much happier and have a much stronger connection to metric. When the first time we did an internal employee engagement survey, we did an NPS survey, which a lot of companies do. We had an NPS of one in our employee base. We finished last year an NPS of 55. And so it's the same number of people, just different people and people that recognize they're part of something bigger and I read a lot.
Michael Johnson:I certainly understand that people will continue to maybe have different opinions about that. But if you zoom out and you think like, is this better in the sense that standardization maybe not perfect, but standardization has helped a market that was $0 in the legal space 13 years ago, Emerge is something that's greater than 20 billion in 13 years. Is that 20 billion retail? So I mean I think like that's, I mean we, we estimate it's closer to 80 billion of actual transactions changing hand, because I grow the plant, I sell it to a processor, processor sells it to somebody else. So this is zero. And could that have happened without standardization? I mean, 13 years ago we were arguing over DVD, HD DVD and Blu-ray. So what the same? Now I don't know anybody who's a Blu-ray player. I had both.
AnnaRae Grabstein:Now I don't know anybody with a Blu-ray player. I had both. So stewardization and the growth of the market Talk about enforcement, and you know, one of the things that I hear people say in the whispers of the industry is that metric knows and sees all they could tell you exactly, like where the product is leaving the supply chain, if it is, and or where things are coming in and out, but, but, but nobody is enforcing, and obviously you guys are not the enforcer, but you are a tool that the enforcers have, and are you delivering those red flags in the system to make it easy for old school enforcement agencies that aren't data crunchers to understand what's happening in the industry, to to like to address enforcement kind of where do you sit in terms of not only the way that you see enforcement but the way that you tools to to flag um like on on um on on normal activities, whatever that's called?
Michael Johnson:Yeah, anomalies. Um, so it's important to understand a couple of things about metric in in answering that question. Um, number one I can see data I'm not doing investigations and so certainly you can see data and you can see elements that seem, you know, kind of out of the ordinary metric, and that's that's exactly why we produce anomaly reports and that's exactly why we give that information to inspectors to be able to do something. Just because something looks weird and metric doesn't mean that there's something that's inappropriate going on. There's something that's inappropriate going on. It's not the most standard business process industry, and so I mean, when you have, I've seen scenarios where, especially in California, you talk about, well, you know there's challenges with burner distros and things like that, and I know there are. I've read the based on simply reading the same articles that you've read.
Michael Johnson:I don't, I don't, I can't in someone that looks at the data and sees the data, there's a lot of reasons why a product will transfer to someone and then stay there for a while. For example, like if you're a cultivator and you produce pounds, thousands and thousands of pounds. The market's not there. You'll freeze. You'll freeze a lot of your, of your packaged cannabis. That happens, that's allowed Right.
Michael Johnson:So is that because somebody is doing something wrong or because they're? Maybe the market is not right from a pricing perspective? I don't know, because I'm not doing the investigation. The data is there. It's a tool and that tool is certainly one that I think it's acted on by by investigators a lot more often than I think they get credit for. But there's, I mean, I don't, I don't think anybody in California is pretending that there's not an illicit market. But if you look at the volume and you do see, you see what I think a lot of reported in California is a fairly stagnant revenue market. You do see the volumes actually increasing, so at like a lower price per, but your volumes are actually increasing over time. I mean over multiple quarters.
AnnaRae Grabstein:You look at quarter over quarter and it's two data points More cannabis being produced, less or stagnant amount of revenue.
Michael Johnson:Right and there's different. There's some good to that and there's some. I'm sure that's not good and it really depends on kind of the direction you want to take. And so metric is a tool, just like many other tools. We're going to help facilitate the product, to be able to identify these anomalies, to help inspectors be able to focus more on the bad actors and I think they have.
Michael Johnson:We released last year a new data platform that takes the data, that's, the state's data, and is able to house it in Snowflake, which is widely considered the gold standard for kind of data storage and making it more accessible. We we set Tableau on top of that, which again gives a very to your point, ben. It definitely makes the prettiest pictures, no question, and it makes it easier for any person at any level, to understand and start to see the relationships. And that's the point Customer experience about making it easy, incredibly easy, and so, while there's a million different ways that you can visualize something or identify something, we're trying to make this as accessible as possible and actionable as possible, and these I mean the anomalies are what we talk about, and flagging anomalies is something that Metro has done since day one.
Michael Johnson:Your point, ben. That doesn't mean it's been super easy for you know, a typical investigator or lay person to be able to kind of make sense of literally millions of plants and packages and hundreds of millions of items that are sold in california every single year. So we can do that, we can be better. Just like regulation might be really complicated, we can make the software, uh, translate it in in in the magic of chat gbt um to make it super digestible and make it, make it make sense, and that's that's, that's what we're working towards.
Ben Larson:So, as you kind of like, focus on the customer experience and elating your customers and building new features, how do you think about the litany of softwares that are accessing the API and your kind of? Are there lines drawn as far as the company goes Like we're not going to go there, or do you just offer the API so that softwares can plug into it if they want? And if you start to compete with them, then so be it. And yeah, have you has kind of an add-on to that? Sorry, I just asked a bunch of questions. Have you guys made acquisitions to better serve the customers, or is that on the roadmap for Metric?
Michael Johnson:Yeah, two separate things, but I guess it could be, combined, so we have over 1,200 integrator relationships which I don it could be combined, so we have over 1200 integrator relationships which I don't know that there is anybody that has any more in the cannabis space, and that's good.
Michael Johnson:Metric functions as a platform and functions at single rail across the supply chain Ideally, because we're only one company. Ideally you have a scenario where we make it as easy and accessible for people to plug in a metric anywhere along the supply chain to be able to add value to whoever they're trying to add value for. And there's a number of different other software providers that provide value to the regulator. There's a number of different software providers that provide value to dispensaries, like, most notably, point of sales, so we have over 1,200 that we work with. We believe very, very strongly in being that sort of central hub that all of these businesses can build on top of and build into to provide a better experience overall. There's many things that we're not going to do. This is what we're trying to do. We're trying to do supply chain optimization, I would say, for the regulated industry, with the express intent of protecting the regulated industry and public health. There's a lot of other ancillary things that you can do as well. That doesn't mean just because we're focused on supporting regulatory compliance through public health and public health, that doesn't mean that we also can't evaluate opportunities to accelerate the timeline. Call it from truck to shelf through a distribution channel. We can do that too. It's not an or it's an and so it's not mutually exclusive. To that end, the future of metric is definitely much more focused on building opportunities to make it easier to leverage data that already exists within metrics, so we're not recreating the wheel. So people can create lighter weight software and more innovative products for the overall industry without having to recreate the wheel, and that's really something that we think is a beautiful thing. We're never going to be a point of sale, but if we make it easier for the data to come from Metric into whatever your point of sale is, or out of your point of sale back into metric Um it, it's a much better experience for everybody across the supply chain. To that end, we were not um. I wouldn't say that we're in a financial position where I would expect us to be wildly acquisitive. Um, if, if anybody wants to give us some money to be acquisitive, we're certainly interested in that Um. But we did do a very, a very small technology acquisition last year that came with a couple of people and was a kind of a foundational element that we just believe contributes to the extension of that rail like not the expansion, not the like widening of the rail, the extension of the rail.
Michael Johnson:And so one my my very first trip, right after becoming CEO, to California and spending time with the DCC. Over a few days we went to 11 different licenses of all kinds and the common refrain that we heard without, I mean, these are not related to each other was that it's such a process, once we get a metric package in, to then try and translate the metric package into keeping track of each individual item. We have to relabel, we have to re-sticker each item to be able to check out through our point of sale. We have just as many people at our dispensary in the back of the house we do in the front of the house. In the front of the house, people are really your experts and attenders, providing meaningful, meaningful Sherpa experience to, to, to the, to the consumers. And so we we heard pretty loud that that's a problem, and I think that the loudest we heard from was the DCC Like. This is not, it's not great. We want to make sure that we're doing the best we can to extend this thing, to extend the visibility all the way through, and so in doing so we acquired some technology, which is, which is morphed into now, over a year later, a product we call Retail ID and it's really, I'd love to tell you it's the most novel thing. It's not.
Michael Johnson:Cannabis is a bit hindered by a number of different things the hidden taxes and just lack of accessibility to banking insurance, so on and so forth. But there's other things you don't think about, and so if I were to take this water and we were to go anywhere and you look at this barcode and this water, you can go to a gas station, a grocery store, what have you? And check it out, check out using scanning that barcode, and everybody recognize it. And that's because there's this uniform standardization of each individual product through this quasi-nonprofit called GS1. Because cannabis is federally legal, gs1 doesn't really apply here and also wouldn't really help with a lot of the supply chain challenges in terms of identifying each of these, each of these items, and so what we produce is really commonality at the at the top of the production cycle, to where we're identifying and cataloging now each unique type of product that's produced, so that there's a foundational global product catalog that enables essentially you to have this unique identifier, for if you're producing, you know wild gummies or you know some kind of a really anything you can have that standard so that the entire industry is able to to hook into that standard and be able to see what's happening across the supply chain. See, you know truckshelf velocity. It will ultimately enable really meaningful acceleration in terms of CPG standards that you see in other CPG industries, like vendor-managed inventory and consignment and things of that nature. And it's amazing, and the data points are going to be hugely beneficial in terms of enabling operators to be able to see what's selling and what's not, in terms of enabling operators to be able to see what's selling and what's not.
Michael Johnson:But if you get all the way through the supply chain, you realize, like this restickering, repackaging, reboxing, breaking cases, things of that nature how long that takes. It's really inefficient. And so, in identifying, we put a QR code in each individual item item which should take absolutely no additional time in production. Because of that API connectivity and because of the ability to make a serialized QR code accessible to anybody that's producing a product now, without changing a single part of the process, you're able to actually create a connection that's identifiable through that QR code across the supply chain so that when you get to the dispensary I don't have to add another label so that I can check out for my point of sale, I don't have to try and keep track of these individual items or these other items in this box that I put on my shelf, because I can't tell, I can't differentiate one from another. And so ultimately we get to a spot where, based on the research we've done in California, the average dispensary saving one minute per retail item, that comes out to over $20,000 per store and it literally saves over $60 million of the in the industry in a given period, which is incredible. But and but when I say it's, we're doing more for more.
Michael Johnson:The express outcome and express benefit is public health related. So if I'm a consumer and I buy this item and I scan the QR code, I can see the name of the item, picture of the item, the description of the item or what am I supposed to experience, and I have direct access to a plain layperson's view of the COA. I also have the actual link to the COA, to the actual lab test. So I can read all 15 pages if I want, but it's translated into layman's terms, lay person's terms, on how we can make sense of this. It's incredibly beneficial If you're somebody that's concerned or confused, or what's happening here like is this the type of thing that has been tested Like?
Michael Johnson:This is the proof. The proof's right here. I just scanned this. The type of thing that has been tested Like? This is the proof. The proof's right here. I just scanned the QR code. And, even more important, let's say you know every week you head down to your dispensary and you stock up for the week and then you hear from a friend or you read an article that something's been recalled. Like how do you know if your product's been recalled? Recalls are really expensive for everybody across the supply chain. They're also dangerous for consumers. So we have the ability now to scan that same QR code. Pops up big red letters, this product has been recalled. You're able to take that back to your dispensary, change it out for one that hasn't been and ultimately, you're keeping people safe, you're strengthening the market and you're strengthening the confidence in the market, which really becomes that rising tide lifting all boats the confidence in the market, which really becomes that rising tide lifting all boats.
AnnaRae Grabstein:It's a great innovation, especially in that there's been many states that in their regulations and sometimes it's been in hemp and sometimes it's been in cannabis have required products to actually either have a QR code or a link to a website that has a lot of this information available to consumers.
AnnaRae Grabstein:And I think that it's actually easier said than done and has been challenging for some product makers, brands, manufacturers, to keep those websites up and to just manage sort of the technical side of it.
AnnaRae Grabstein:And the truth is, from a consumer trust perspective, having that information come from a third party, like metric, as opposed from the company itself, I think does legitimize it more and and in terms of comparing it to the, the, the barcodes on other products that GS one puts out, it's like, of course, like we should be doing this. So, yeah, hats off to you guys. I think that that will be really useful for everybody. As we're getting closer to the end, I wanted to ask a final question about your predictions of what are some big things that are coming in the industry. I think you have a unique seat that you sit in and that you get to not only be working with, I think, close to 350,000 operators that work in your system that are cannabis licensees or employees of licensees, but you also have close relationships with regulators, and so I would love to hear your predictions of where things are going on the state level, on the federal level, what you think is in store.
Michael Johnson:I think that you see a lot of optimism if you're in the cannabis space, based on where we're at from the national election cycle, and you see support from both of the candidates, more support than I think we've seen across the board in previous elections, and I think that's meaningful. But I would caution everybody it's going to feel slower. Everything feels slower. It's only been 13 years.
Michael Johnson:And that's only 13 years for one state, so every other state, if you're not Colorado. It's all been less than 13 years, and so it feels gradual. And then you look back and you realize, oh, that was actually quite sudden. It feels gradual and then you look back and you realize, oh, that was actually quite sudden and it's, it's.
Michael Johnson:I'd be mindful of, of the impatience and I'm incredibly impatient person, be mindful of impatience on what the unintended consequences are, as you, as you've mentioned at the start of the show relating to him, number of unintended consequences can come from a variety of different things and I, I, I caution people to like this sounds great, let's run at it. You realize, oh, oh no. And so sometimes there's easier solutions, more elegant solutions that are a magnitude or two further away from what seems most obvious. And calling back to your, to your point about regulations, Um, yeah, it would certainly, it makes the most sense. Like God, these regulations don't make sense to me, so I'm going to lobby against them, and perhaps that's the right answer in certain situations, and perhaps in other situations, the right answer is merely to reach out to me and, um, hey, this now takes me another hour to do.
Michael Johnson:What can we do about that? And sometimes we can solve it to where? Not only do we save that hour, but we actually make it happen faster. And so the answer is not. It's funny when we say it's always the last place we look. That's just because we stop looking Right. We can keep finding things, and metric can be that partner, and so my prediction for the future is that hopefully more people will hear that level of commitment, they will actually be able to believe that we are walking our talk and they will start coming to us in these situations, and I think we will ultimately be able to accelerate a lot of the challenges that are being experienced currently in the supply chain.
Ben Larson:Wow, michael, I really appreciate this time. I like my brain's on fire just thinking about, like, what to do with all this data and, like you mentioned ChatGPT and I'm like, oh, I want a metric repository and I just want to be able to ask questions. And if I was a software company in the cannabis space I know you said that you know it's like, yeah, this API, everyone plug into the rails going longer, not wider, but the the how you've repositioned the thinking of the company being the Sherpa it's a term that we've actually used internally at Virtoso. I just love that, that image of you know putting practically the customer on your back and carrying them up the mountain, and I'm just really excited to see what you guys do in the future. So thank you for sharing all that. I'm like I want to go learn about plugging into the api and playing around with it absolutely and please, like for any listeners.
Michael Johnson:I say this to everyone. I say this to every single employee that comes up. I put my number on the whiteboard. Every single employee that starts like I want to hear from you, call me, text me, smoke signal, send me an email, and everybody's like, yeah, I definitely will, and I never hear anything. So, please, please, you know like, I will gladly tell you like, hey, I just can't do this right now. It just doesn't happen.
AnnaRae Grabstein:I tell you like, hey, I just can't do this right now. It just doesn't happen. I genuinely mean this Careful what you wish for Well, so it's the end of the hour and it is time for our last call. So it's almost like I queued that up for you, perfectly, but why don't you give us our last call? What would you like to leave our listeners with today, michael?
Michael Johnson:Yeah, metric is here for you. If it doesn't feel right that I'm describing metric as a customer experience business, then call me and let's talk about it, because I need to understand exactly where your pain points are. Just because something's been a certain way forever, the odds are I don't know about it. If something is not getting materially better in metric and you haven't experienced material improvement over the last two years, I guarantee you I do not know about it. Let me know, let's talk about it. My team wants to know. We took care of the snowflakes. It runs a lot faster than it used to. It's going to keep getting faster. We're going to make it easier to access. We're going to make your user experience meaningfully better. But there's something out there that we just don't know about and I want to know we really do care. Metric wants to be your partner. Metric wants to support the strengthening of the market and I couldn't be more appreciative just to have the opportunity and for you to lend your platform to enable me to share that message for Metric.
Ben Larson:You heard it here folks call michael. Uh, michael, I don't know if you want people to call you, but what is the best way for people to get in touch with you?
Michael Johnson:um, probably the easiest way, just because, uh, asynchronous communication tends to be easier. Uh, just email me. My email address is michaeljohnson at metriccom. I don't have an ea. I don't like. Nobody else manages anything, I go through every one of them on my own. Please do it. I'm really bad at following up on LinkedIn. There's a lot of spam in that inbox.
Ben Larson:Yes, I love it. Well, thank you so much. Thanks for spending the last hour with us. A wealth of information, and I feel like I know metric that much better now. So thank you, thank you, all right, we'll talk to you soon. Anyway, I'm serious, I'm going to jump into chat GBT. I'm going to learn how to make a repository. I'm going to just start asking metric questions. I don't even know if this is possible. I'm not a software guy and I guess I'll just start sending Michael emails in the middle of the night guy, and I guess I'll just start sending Michael emails in the middle of the night.
Ben Larson:Yeah, let's see if he really does respond. Right, right, what about you folks? Are you going to email Michael? Are you going to email us? You can also reach out to us on LinkedIn, in the comments, not in the direct messages. Do follow us. Our community is growing. We love getting the comments and seeing the views and the likes and shares. So thank you, thank you. Thank you for doing all of that, thank you to our teams at Vertosa and Wolfmeyer, thank you to those who are watching us live or on the recording on our podcast. Don't forget to share, like, subscribe all the things and join us when we do our High Spirits Live Mixer. I just brought back an old shout out to our High Spirits Live days, but it will be live mixer in person at MJBiz. I think it's going to be on Thursday of the week I don't know the exact date off the top of my head. Until then, remember, folks, stay curious, stay informed and keep your spirits high. That's the show.
